Coca-Cola Hellenic profits plunge 25%22 August 2012
Austerity measures in Italy, Ireland and Greece combined with increased commodity costs hit Coca-Cola Hellenic's profits in the first half of the year.
Profit at the world’s second largest Coca-Cola bottler was down 25% as net income reached €109 million – roughly in-line with the €110.1 million forecast by analysts. Sales were up for the fourth quarter in a row and increased by 1% to €3.43 billion.
Sales volumes dipped by 2% to 1.01 billion cases as austerity measures in Greece, Ireland and Italy took their toll. However, the firm maintained its guidance for free cash flow generation and investments of €1.45 billion by the end of 2014.
The company implemented new commercial and marketing initiatives, such as more creative packaging to squeeze more sales out of each case sold and has diversified into non-sparkling beverages such as tea and health drinks.
These moves helped the company sustain or increase its market volume share in sparkling beverages in most of its markets, including Italy, Switzerland, Austria, Russia, Ukraine, Romania and Bulgaria.
Coca-Cola Hellenic will also accelerate its personnel and management cost saving programme this year in a bid to drive profitability. The firm will spend €100 million on restructuring costs, up from the €50 million announced earlier in 2012.
Dimitris Lois, Coca-Cola Hellenic’s chief executive said the firm is targeting growth in countries such as Russia and in the long-term Italy, where he praised the government’s handling of the debt crisis.
"We are very happy to see the initiatives from (Italian Prime Minister Mario) Monti," Lois told Reuters.
"He has taken the right initiatives to balance austerity and growth," said Lois, referring to Monti’s decision to postpone an increase in value-added-tax (VAT) rates.
Coca-Cola Hellenic shares were up 0.3% on the news.
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